David Brancaccio: The accusation is that banks played fast and loose in processing the wave of foreclosures that hit when the housing bubble burst. The remedy is a reported $26 billion settlement to be announced this morning. We’ll know soon how many states have signed onto that deal.

Maryland is a state that was hit especially hard by the foreclosure crisis. The attorney general there is Douglas Gansler. He joins us. Mr. Gansler, good morning.

Douglas Gansler: Good morning.

Brancaccio: Well how’s it going to work? People who are out of their houses already could get some money, like a check in the mail?

Gansler: There’s actually four different pools of money. One pool of money will go to each of the states to be administered by the attorney general of that state to be used for housing related projects. Most states will be using that to beef up the number of housing counselors available to folks. Another pool of money will go to people who’ll get a one time check — approximately $1,800 to $2,000 — who have been foreclosed upon; are no longer in their homes.

Brancaccio: And there are two other chunks of money that’ll be coming in?

Ganasler: And the two other chunks of money are write-downs from the bank. One goes to a group of people who are not delinquent on their payments but they have a huge negative equity in their homes. The bank will allow them to refinance and then they’ll be able to pay a lower interest rate on their payments.

The biggest pool will go to folks who are on the brink of foreclosure. They’re about to go into foreclosure, they’re delinquent on their payments — for principle reductions. So these people are more likely going to be able to stay in their homes.

Brancaccio: Mr. Gansler, remind us though, what did the banks do wrong here so that they have to pay this much money?

Gansler: Well, in October of 2010 you recall it came to light they were actually “robo-signing” documents to throw people out of their homes. Machines were throwing people out of their homes, not people. They weren’t even looking at the particular circumstances of homeowners before they were throwing them out on the street with their kids.

Brancaccio: They were doing it by rote?

Gansler: That was the first thing and then as we delved into and we investigated it further, a number of things came to light. Obviously, one of the other things that people are very aware of is the targeting for sub-prime loans of minorities and other folks who clearly were going to be unable to make their loans.

Brancaccio: So you’re not done suing — this is only part of it?

Gansler: This is really only a literal and figurative down payment on what the havoc that was wreaked upon our economy in general and the specific people who were foreclosed upon. So it’s an incredibly attractive settlement for the attorneys general who frankly only have a thin slice of jurisdiction over national banks anyway.

Brancaccio: Maryland Attorney General Douglas Gansler. Thank you very much for this.

Gansler: Thank you.